US Employment Cost Index Surges To Record 5.07% YoY In Q4
With The Fed huddling in The Eccles Building and traders hyper-focused on any signs of 'peak inflation' (because that means 'peak Fed tightness'), this morning's Q4 US employment costs index rose 1.0% QoQ (slightly cooler than the +1.1% expected and down from the +1.2% QoQ in Q3)...
Source: Bloomberg
Labor costs have risen at least 1% for six straight quarters, extending what was already a record streak in data back to 1996.
As a reminder, Fed Chair Powell explicitly mentioned this signal, and while the quarterly changes are trending in the right direction, we note that the YoY rate of change rose to a new record 5.07%.
The ECI is notable in part because other recent wage data (the average hourly earnings data in the monthly payroll report) have pointed to a deceleration in wage growth.
— Nick Timiraos (@NickTimiraos) January 31, 2023
The ECI could provide confirmatory or contradictory evidence of this recent trend for the wage story.
Given the record rise in ECI YoY, we are not sure this is what The Fed wants to see...
